Analysis of the Connotation of Good Faith of Directors in China: Comparison with Delaware Corporate Law
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Due to the accountability gap between the duty of loyalty and the duty of care, some countries have begun to restructure the fiduciary duty system of directors in corporate law, with the most important call to introduce an independent duty of good faith to directors. Typical is the discussion of the concept of "good faith" in Delaware, USA, for nearly 20 years. In China, such a controversy has also arisen. To clarify whether it is necessary to introduce the question of the duty of good faith, this article clarifies the concept of the duty of good faith by collating a series of precedents from the Supreme Court of Delaware and the Court of Chancery that laid the foundation for the duty of good faith. A comparative study of the legislation about good faith in US company law and its limitations concludes that there is no need to introduce an independent duty of good faith under a fiduciary duty in China and then proposes that the judgment on "good faith" can be introduced into the fiduciary duty of directors by expanding the scope of the existing duty of loyalty to include the connotation of "good faith", or by introducing the principle of good faith in the field of company law.
Delaware Corporation Law; Fiduciary duty; Good faith